The British government is about to review its defence procurement process. It will encounter some very familiar problems.
Dominic Cummings, the Prime Minister’s Chief Special Adviser, is planning a full review of defence procurement. This is welcome if, unlike recent reviews, it is thorough and does not shirk politically embarrassing issues. Over 90 percent of defence programmes are brought in on time and budget, and many by excellent agile small and medium-sized enterprises, so Cummings – or more appropriately those who will execute the review – will need to focus on large, high-risk programmes.
Almost all major public sector procurement is bedevilled by cost escalation. Just look at the Hinkley Point nuclear reactor programme (up from an estimate of £16 to over £20 billion), Crossrail (up 1½ times to £18 billion) or the HS2 high speed railway project, which was initially estimated to cost £34 billion, but may yet end up costing £88 billion). Cost overruns, serious delay, poor delivery and lack of political consistency are not problems confined to the Ministry of Defence. So a thorough review could yield benefits right across government.
The principal procurement failings include over-specification, over-optimistic initial cost forecasting (which our bidding process encourages), poor contracting, political and ideological interference, inappropriate use of public–private partnerships, delay and change in specification, inadequate examination of through-life costs, lack of adequate programme control, and political reprogramming caused by budget cuts. All these lead to avoidable cost increases. (end of excerpt)
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